TelexFREE Chapter 11 cases to be moved to Massachusetts from Nevada

By Kali Hays

New York, May 6 - TelexFREE, LLC's Chapter 11 bankruptcy cases will be moved to Massachusetts, according to an oral ruling given Monday in the U.S. Bankruptcy Court for the District of Nevada.

After considering evidence from a May 2 hearing, the court decided that "in the interest of justice" and the "convenience of parties involved," the cases should be moved.

The court found that approximates 90% of creditors in the case reside in Massachusetts, as do 10 of the 30 largest unsecured creditors in the cases.

As previously reported, the Securities and Exchange Commission requested the change of venue for the cases on April 24.

The SEC said that company co-owners, James Merrill and Carlos Wanzeler, "hastily" filed simultaneous Chapter 11 petitions for TelexFREE, Inc., TelexFREE, LLC and TelexFREE Financial, Inc. selecting Nevada as the proper venue for the cases to be held because TelexFREE, LLC was organized under Nevada state laws, but that the action "appears to be a coordinated effort to avoid the Massachusetts courts."

However, the SEC claims that the while the company "maintains what appears to be a rent-a-space office in Las Vegas," it transacts "virtually no business in the state other than the recruitment of participants in its scheme," according to the motion.

The SEC further stated that TelexFREE's filing in Nevada "is a transparent attempt to avoid where [its] 'business' and numerous witnesses are located and where various government agencies have been investigating fraudulent conduct."

As previously reported, the SEC filed a complaint against TelexFREE, LLC, Merrill and Wanzeler, alleging the operation of a Ponzi scheme resulting in company assets being frozen along with those of Merrill and Wanzeler.

TelexFREE is a private, Marlborough, Mass.-based telecommunications and multi-level marketing company. The Chapter 11 case number is 14-12524.

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